The minimum wage in Mexico depends on the location of the employee:

- Free Zone of the Northern Frontier (NBFZ) is MXN 5,206.8 per month
- The rest of the country is MXN 207.44 per day set by the National Minimum Wages Commission (CONASAMI)

The individual income tax ranges from 1% to 35%. Income tax is calculated according to progressive rates.

Mexico has a new special regime that if the employee meets the criteria, could lower the income tax called "Regimen Simplificado de Confianza". However, even though the employee is entitled to this lower tax benefit, they can choose to apply it or continue with the average income tax.

• Social Security IMSS - MXN 643.71
  • Occupational risk* - 0.50%
  • Retirement and old age* - 4.241% 
  • Retirement* - 2.0%
  • Benefit for disabilities* - 0.70%
  • Disablement and Life Insurance* - 1.75% 
  • Nursery and Social Benefits* - 1.0%
  • Medical Expenses* - 1.05% 
  • Infonavit (mortgage fund)* - 5.0%
  • Local Tax - 3.00%

• Surplus Fee (extra Social Security cost for bonuses) - 1.10%

Annual costs 

• Vacation Bonus - (daily salary*vacation days)*25% (Paid after one year of service)
• Year End bonus/Christmas Bonus - 15 working days of wages for employees with one year of service, pro-rated for employees with less than 1 year of service
• Sharing profit - 10% of the company's taxable profits

*These costs are calculated on the employee’s contribution base salary (SBC). The contribution base salary is indicated during the registration of the employee in the Mexican Social Security Institute (IMSS). The contribution base salary is made up of the payments made for the daily quota, bonuses, perceptions, food, housing, bonuses, commissions, benefits in kind, and any other amount granted to the employee for their services.To determine the social security contributions for both the employer and the employee, the days worked or not worked by the employee and the base contribution salary in each period (fortnightly, monthly, or bimonthly) are considered.

• 200% of the hourly rate, the first eight hours of overtime during a week
• 300% of the hourly rate, overtime hours above the first eight hours

Terminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.

Terminations in Mexico can be complex. There is no at-will termination for employers, and if the termination is without cause, a mutual agreement must be agreed upon. Compliant terminations include:

• Voluntarily by the employee
• By mutual agreement: end of year bonus, holidays, and severance must be paid
• By the expiration of the contract
• Unilaterally by the employer based on:
  • probation period
  • disciplinary dismissal according to the Labor Code (Article 47 LFT)

The employee should not be notified when termination is by mutual agreement until the employer has set up the termination process (calculated severance payment, written the termination letter, and informed HR). A termination must be done within 24 hours, including paying the employee. 

The employer will have to notify the employee and request a wet ink signature of the resignation letter provided by the employee the same day. The employer will have 24 hours to pay the employee severance and benefits accrued.

• 90 days of salary compensation, including payment of employment benefits
• 20 days of salary for each year of services rendered
• A seniority premium, equal to 12 days salary per year worked, including paid vacation, Christmas bonus, and additional accrued benefits

An employee dismissed without just cause has the option to be reinstated to his former job instead of receiving the severance payment.

To protect you from unforeseen financial risks arising from terminations, Deel applies a Severance Accrual to all employment agreements in this country.  Deel has extensive expertise in managing litigation risk globally and our Severance Accrual calculation is based on the prevailing common-law or statutory entitlements and local best practices. In the event your employee resigns or is not entitled to severance, all unused amounts will be returned to you.

Full-time employees who work for five days per week are entitled to a minimum of 12 days of paid time off (PTO). This entitlement increases annually at a rate of 2 days per year for the first five years up to 20 days; and then 2 days every five years thereafter up to a maximum of 32 days.

Mexico celebrates seven national and one regional holidays based on the employee's location. 

National public holidays include: 

1. New Year's Day
2. Constitution Day
3. Benito Juárez's Day
4. Labor Day
5. Independence Day
6. Revolution Day
7. Christmas Day

• Name
• Start date
• Length of the employment
• Job description
• Termination conditions
• Christmas Bonus
• Beneficiaries, according to article 25 of the Federal Labor Law.